Thailand, Indonesia probe into alleged Rolls-Royce corruption

Thailand's flagship airline said it had launched a probe into revelations that Rolls-Royce paid millions of dollars in bribes to win contracts.
Thailand's flagship airline said it had launched a probe into revelations that Rolls-Royce paid millions of dollars in bribes to win contracts. PHOTO: AFP

BANGKOK/JAKARTA (AFP, BLOOMBERG) - Thailand's flagship airline on Thursday (Jan 19) said it had launched a probe into revelations that Rolls-Royce paid millions of dollars in bribes to win contracts, including to airline employees and government officials.

On the same day, Indonesia's anti-corruption agency named the former CEO of the country's flag carrier Garuda,Emirsyah Satar, a suspect for allegedly receiving bribes from Rolls-Royce while he was head of the airline.

The agency said the corruption was alleged to have taken place in Indonesia and Singapore, and it was working with Britain's Serious Fraud Office (SFO) and Singapore's Corrupt Practices Investigation Bureau.

The corruption case is related more to individual actions and not Garuda’s activities as a company, the airline said in a statement. Garuda is fully cooperating with KPK in its investigation, it said.

Satar wasn’t immediately available for a comment on his mobile.   

The investigations come after the renowned British engine-maker agreed to pay a US$808 million (S$1.15 billion) fine to authorities in Britain, the United States and Brazil to settle bribery and corruption claims.

After its largest ever graft probe, Britain's SFO found Rolls Royce paid massive bribes over three decades to win contracts in Indonesia, Thailand, India, Russia, Nigeria, China and Malaysia.

A British judge this week said the investigation revealed "the most serious breaches of the criminal law in the areas of bribery and corruption" prompting Rolls Royce, which cooperated with the probe, to apologise.

But the findings - concerning the engine maker Rolls-Royce, which has no connection with Rolls-Royce cars, a marque owned by the Germany auto maker BMW - will likely make for uncomfortable reading in the countries where bribes were paid.

In Thailand investigators found some US$36 million in bribes and incentives were paid between 1991 and 2005 to intermediaries - including "agents of the State of Thailand and employees of Thai Airways" - to help the company win lucrative jet engine deals.

A Thai Airways statement said the company will "gather information from all the sources in order to investigate the matter thoroughly".

"When all facts have been compiled and reviewed" the airline will determine appropriate actions to take on any corruption found", the statement added.

Sansern Poljiak, secretary general of Thailand's anti-corruption watchdog the National Anti-Corruption Commission told AFP that his staff were "seeking more information" from UK and US authorities before deciding whether to launch their own probe.

He warned that some of the allegations unveiled by British investigators may have occurred too long ago to bring criminal charges, although civil compensation claims could still be made.

The public data released by the British courts does not name implicated individuals.

But millions went to someone dubbed "Intermediary 3" who passed "success fee" money around to Thai Airways staff and government officials.

The corruption claims cover a period when Thailand saw significant economic and aviation sector growth - and was mostly governed by civilian governments.

Thai Airways has long had a close relationship with the country's powerful military, police and government elites. Its board routinely contains senior police and military officers.

In Indonesia, the country's Corruption Eradication Commission announced Thursday that ex-Garuda CEO Emirsyah Satar had been named a suspect for allegedly receiving kickbacks from Rolls-Royce in exchange for buying planes fitted with the company's engines.

Satar is accused of accepting 1.2 million euros and US$180,000 in cash, as well as goods with a value of US$2 million while he was head of the airline from 2005 to 2014, according to the agency.

As the chief executive of Garuda for a decade through 2014, Satar oversaw a debt restructuring and an initial public offering that allowed it to expand its fleet to 134 aircraft.

He’s currently the chairman of Lippo Group’s MatahariMall.com, or PT Global ECommerce Indonesia.  

Satar’s performance and contribution as MatahariMall.com chairman have been very positive and “we respect the legal system and process in Indonesia,” Alvin Aulia, head of communications and partnership, said in a text message.  

Garuda slid 2.3 per cent to 346 rupiah at the close in Jakarta, the most since Dec 30, while shares of PT Matahari Department Store, which holds about 10 per cent stake in MatahariMall.com, rose 1.3 per cent to 14,900 rupiah.